In partnership with the Current Account Switch Service (CASS), Prospect published a special report which aimed to act as a guide for parliamentarians, officials and businesses involved in developing a comprehensive policy approach towards financial inclusion. Last week, we took a moment to push the discussion further at a Westminster panel discussion with Guy Opperman MP, Minister for Pensions and Financial Inclusion; Anne Pieckielon, Director of Product and Strategy at Bacs; Helen Undy, Director of the Money and Mental Health Institute; and Daniel Chatfield, Lead Security Engineer, Monzo Bank. The event was chaired by Tom Clark, Editor of Prospect.
As Tom Clark noted at the opening of the event, “questions of financial inclusion are only getting more relevant.” Anne Pieckielon picked up on this point and stressed the importance of ensuring the existence of central infrastructure to provide a level playing field for both established banks and new challengers. Switching had a place within this, but Anne went on to note that it was also important that we understand what a well-functioning market should look like and what was driving consumer needs. “We can all agree that the banking system will evolve, and we need to understand what this means to our consumers”.
The need to understand how consumers interacted with and accessed their financial services was an often-repeated theme. Helen Undy highlighted the link that existed between financial difficulty and individuals with mental health problems. There was longstanding evidence, she argued, that people with mental health problems are three times more likely to be in financial difficulty. Since it is estimated that one in four individuals are or will be affected by their mental health at some point in their lives, the wide spread nature of this issue should not be underestimated.
According to research conducted by the Money and Mental Health Institute, this disproportionate negative impact was due to three factors. Firstly, living with a mental health problem often resulted in lower income. Secondly, household expenditures and the cost of living were likely to increase since “staying in control of spending in a period of really acute illness is very hard.” And thirdly, the ability to manage the mismatch between lowered income and increased spending is often reduced. It was on the latter point especially, Helen believed, that there was potential for financial technology and the wider banking industry to make a difference by developing inclusive financial services and products.
Gambling blocks, such as the ones developed by Monzo and Starling Bank, were cited as a fantastic example of a service designed with inclusion in mind. One of our panelists, Daniel Chatfield, was actually the acting engineer that built the gambling bloc. He noted the naivety he originally had when he began looking at the issue: “Initially, we would simply have an on/off button. I did not understand, and I’ve not had a gambling problem, [so] I didn’t foresee the problems that these individuals have.” Daniel went on to detail how, by working closely with one of their customers who had a gambling addiction, the team went on to design a more effective system which included a 48hr cooling off period. The importance of having an ongoing dialogue with consumers was also acknowledged by Helen Undy who stated that it was “just good design to involve your users in the products that you’re developing”.
Anne Pickielon drew from her experience building CASS and stressed the importance of considering customer feedback. While speed and innovation were both priorities, their research demonstrated that, from a customer perspective, speed wasn’t the paramount factor of importance when customers considered using the service. Rather, factors like whether the system was safe and which remedies were available if something went wrong were more reported by consumers as being more important.
Another key issue that was brought up was the importance of considering the conduit through which people use financial services. For example, while older generations are quite comfortable speaking over the phone, there is a generational gap regarding the matter. Therefore, it is unsurprising that companies take this into account. As Daniel Chatfield noted, Monzo’s customer demographics were very much skewed towards twenty to forty-year olds: “while we also do have a telephone number…. we don’t signpost people towards that quite heavily because we prefer them to contact us over the app chat rather than over the phone call.” A similar point was made later on by Guy Opperman MP: “how many people here actually have met their bank manager in the last year? No one of course. But if you have online banking you’re checking your banking on a regular basis.”
The questions from the audience were wide ranging. From whether virtual “fake” money could be used to alleviate the financially damaging impact of a gambling addiction to whether there were technologically creative solutions for maintaining analogue coverage across the country.
On the first point, Daniel Chatfield noted that this was an interesting idea. However, he wondered if the thrill of gambling was due to the fact that gamblers were putting real money on the line. “As soon as [virtual money] is converted to real money it is still gambling”. Helen Undy responded that, for certain individuals, it was the actual gambling as an activity that they enjoyed and using virtual money to fill that need could potentially work. There were many motivations for gambling, she continued, including financial, so when “addressing problem gambling it’s important that it’s not just about taking away someone’s ability to gamble but replacing the need that they are meeting with gambling”.
On the question of bank branch closures and ATM deserts, Guy Opperman acknowledged that this was a policy issue he felt quite deeply about. Indeed, it formed the premise of his editorial contribution to the Banking on Change report. Opperman noted that there were geographical realities to consider: “I represent twelve hundred and fifty square miles and It takes me two and a quarter hour to drive them across my constituency. That’s the equivalent of London to Bristol.” However, alternative financial services access points such as community banking and post offices were a good way forward. Once more citing the example of his own constituency, Opperman noted that, because of community banks, there were “people there who lived thirty miles (if not more) away from a bank branch quite comfortably.”
Alasdair Smith, Vice-Chancellor at the University of Sussex and Chairman of the 2014-2016 Retail Banking Market Investigation, made a comment from the floor. While the argument was often made that banks were reluctant to get into collaborative arrangements about bank branch provision because they feel it would fall foul of competition legislation, Smith stated that “in two years of running the inquiry into retail banking, no bank ever asked us would there be a competition problem if we collaborated in the provision of branches.” In any case, Smith went on to say that the answer to that was “obviously no there wouldn’t be.”
The question of whether data was a democratizer was raised by Mick McAteer, another contributor to the report. He argued that increased customer segmentation resulted in more exploitation, more discrimination, and therefore more exclusion. Guy Opperman responded that he did not dispute the notion that data could be abused. However, “as a fundamental principle, transparency and access to information allows everybody to have access to it, most of all the individual”. Daniel Chatfield argued that data should be seen as an enabler rather than an end in itself: “If you are a good company it lets you do more good and if you’re a bad company it lets you do more bad.” If the market were competitive, then customers would be aware of their options and would pick good companies. The issue, Daniel concluded, was that the UK financial sector was not a competitive market.
The closing question came from Tony Craddock, Director General of the Emerging Payments Association, who posed a direct question to the minister regarding what government would like to see from industry when it came to promoting a financial inclusion agenda. Opperman acknowledged that the issue was one which many people took very seriously and went on to issue a call to action: “if you want to change the world, look in a mirror. The first question you ask yourself is what does my company do for financial inclusion and awareness? Driving change within the financial services community would be a good start.”
Banking on Change is a publication which examines how we can develop a comprehensive policy approach towards financial inclusion. The report features contributions from the likes of John Glen MP, Peter Dowd MP, Anne Pieckielon, Chris Pond and Guy Opperman MP.
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